John Wiley & Sons Inc. Vs. DCIT (ITAT Delhi)
Copyrighted Article vs Copyright – Subscription Fees Not Taxable as Royalty, Rules ITAT- No PE, No Tax: Wiley’s Rs.16.12 Cr Receipts Held Non-Taxable in India- Access to Online Journals is Business Income, Not Royalty – ITAT Delhi
The appeal was filed by John Wiley & Sons Inc., a US tax resident, engaged in providing access to online journals, databases, & books to Indian customers. The Assessee entered into agreements outside India for subscription/access to Wiley Blackwell journals & online library containing over 7.5 million articles. For AY 2020-21, it declared income of Rs.17.93 lakh, claiming that subscription receipts of Rs.16.12 crore from Indian customers were not taxable in India under the Act or India-US DTAA, as it had no Permanent Establishment (PE) in India. Refund of taxes withheld at source was also claimed.
AO, however, treated these receipts as Royalty u/s 9(1)(vi) r.w. Article 12 of the DTAA, & alternatively as Fees for Technical/Included Services (FTS/FIS) u/s 9(1)(vii), proposing addition of Rs.16.12 crore. The DRP upheld the AO’s view.
On appeal, the Tribunal examined the nature of subscription payments. It held that access to online journals merely grants the right to use a copyrighted article & not the underlying copyright itself. Indian customers had no right to reproduce, alter, or commercially exploit the material, & were only permitted limited access. Therefore, such receipts cannot be characterized as Royalty under domestic law or the Treaty.
